A few days ago, Malaysian leading agricultural chemical and pesticide manufacturer Ancom Nylex Berhad (ANCOMNY, 4758) announced outstanding financial results, indicating continued growth in revenue and profits. Without further delay, let's delve into the latest performance disclosed by ANCOMNY.

Revenue Comparison (YoY -4.91%, QoQ +3.65%)

As of November 30, 2023, the company recorded approximately RM505.16 million in revenue, a decrease of around 4.91% compared to the same period last year (RM531.25 million). This decline is attributed to reduced sales of agricultural chemical products in the Southeast Asian market, lower prices and sales volume of industrial chemicals, and a decrease in the leasing volume of the chemical tanker fleet, leading to a decline in the company's logistics business revenue.

Out of the RM505.16 million in revenue, approximately RM320.70 million came from the industrial chemical segment, reflecting a YoY decrease of approximately 4.69%. Around RM130.20 million originated from the agricultural chemical business, experiencing a YoY decrease of approximately 8.24%. The logistics business contributed approximately RM12.40 million, witnessing a YoY decrease of about 14.48%. The remaining RM41.86 million in revenue came from polymer manufacturing and sales, as well as information technology (IT), media, electronics, and other businesses.

IT, media, and electronics segments contributed around RM21.80 million in revenue this quarter, a YoY increase of approximately 10.65%. Polymer manufacturing and sales contributed about RM20.00 million in revenue, also showing a YoY increase of around 6.95%.

However, compared to the previous quarter, the company's revenue demonstrated a growth trend, increasing by approximately RM17.80 million or 3.65%.

Net Profit Comparison (YoY +7.58%, QoQ +6.34%)

Despite a YoY decline in business income, ANCOMNY's net profit increased from around RM20.56 million in the same period last year to approximately RM22.12 million, representing a growth of about 7.58%. This is primarily attributed to a decrease in the cost of sales for agricultural chemical products, leading to improved profit margins. Additionally, increased sales of high-margin agricultural chemical products (specifically wood preservatives) contributed to the boost in the company's net profit.

Comparing to the previous quarter, the company's net profit also grew by approximately RM1.32 million or 6.34%.

It's noteworthy that ANCOMNY announced the distribution of its first dividend this quarter, with the ex-date on February 15 and payment scheduled for February 16, 2024. However, this dividend is not in cash but in specie, meaning shareholders receive a portion of the company's actual assets, such as stocks or bonds. According to the company's announcement, shareholders will receive 1 common share for every 100 shares held.

Outlook

The company anticipates the El Niño phenomenon to persist until 2024, resulting in a decrease in crop yields and impacting the demand for agricultural chemical products. While El Niño brings dry weather to Southeast Asia, it brings wet weather to Latin America, stimulating demand for Monosodium Methanearsonate (MSMA) in Brazil. Thereby, ANCOMNY is actively seeking regulatory approval to expand the scope of MSMA sales from sugarcane to soybeans.

Furthermore, geopolitical tensions and tightening monetary policies, among other unfavorable environmental factors, are affecting the global economy. Recent attacks in the Red Sea have severely disrupted global logistics, leading to a surge in shipping costs. Reportedly, shipping costs for a 20-foot container from Malaysia to Brazil have increased 2 to 3 times. Management indicates that a significant portion of the higher logistics costs will be passed on to customers.

Finally, the company has been engaging in frequent stock buybacks in recent days. So, dear readers, what are your thoughts on ANCOMNY's recent actions and future prospects?

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Disclaimer: The above is purely for educational purposes and reflects personal opinions. It does not constitute any buying or selling recommendations.

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